Thought Leadership:
CTRM for Startups:
Scale Beyond Spreadsheets
A start-up company is a newly created business within its first few years of operation, aiming for high growth and scalability.
In commodity trading, start-ups often focus first on deal flow, client acquisition, and ensuring supply chain stability. Early on, implementing a CTRM system is rarely a top priority and may not even appear on the brainstorming whiteboard. However, sooner or later, a CTRM of some flavour will be required and sometimes earlier than expected due to auditor needs, regulatory requirements or just proper risk management.
This article is for start-ups to explore whether now is the time for a CTRM.
Spreadsheets: the obvious choice?
When trading commodities as a start-up, spreadsheets are usually the first tool organisations use; after all they are cheap, flexible, familiar and can be created that morning. Dashboards can also be created using tools like Fabric/Power BI/Tableau.
With a small trading portfolio, exposure is limited, with little manpower required for managing operations and payments. With only occasional trades or organisations still validating their business model, a CTRM may indeed be overkill.
The problem is that spreadsheets lack proper controls, are open to abuse or error, lack any form of audit trail and pose a potential risk to the business. Often, this risk will be highlighted by auditors and can severely restrict access to lines of credit and financing. The industry is awash with spreadsheet horror stories – don’t be one of them!
Although the cost of a CTRM has reduced over recent years, for early-stage companies, those funds might be better spent elsewhere until a time comes when it becomes clear that they need to move to the next stage.
Early Warning Signs You’ve Outgrown Spreadsheets
Several variables determine the payback period for a CTRM system, and they can vary widely depending on the size and complexity of the organization:
Too many trades
once trade count approaches 20 per month, managing spreadsheets can be very time consuming as complexity also grows
Too many errors
including duplicate entries, inconsistent data across multiple spreadsheets often owned by different individuals, each requiring manual updates
Confusion on source of error
as there is no audit trail or change history to track data modifications
Lack of business control
such as user permissions and approval workflows, enables any user with access to the spreadsheet the ability to make changes such as accidental overwrites, with formulas overwritten with fixed values or pasted incorrectly without warnings
Real time exposures
required, with auto-updates occurring as soon as trades/ operations are captured or altered
Misinterpreting exposures
as data can be sorted, filtered or hidden by users without notifying others
Too many delays
due to the responsible spreadsheet owner being unavailable. With no version control, making it hard to track changes or revert to previous states
Challenges generating reports
including regulatory and compliance reports
Security concerns
as spreadsheets have a lack of integrated security features
Regulatory compliance
becomes a long manual process
Difficulty demonstrating creditworthiness
controlled process and risk strategy to banks, auditors and stakeholders which could lead to difficulties getting trade finance lines
Amphora CTRM eliminates the above concerns.
So, as a start-up why not get ahead of the game, and adopt Amphora CTRM from day one of operations?
CTRM Options for Start-ups
Amphora leaner CTRM is suitable for early-stage companies due to:
Low initial cost
with minimal implementation fees due to being a start-up with limited historical activity and limited (if any) integrations to other software required
Speed to go-live
measured in days, not months, with the environment built and ready to calculate daily P&L within 10 days
Small commitment period
of one year or less
Flexible user count
offering the ability to increase and decrease user count during contract
Low variable cost
once live, the ongoing fee can be based on trade count as opposed to user count, so if you have a slow month in trading, you don’t have a large CTRM fee due
Able to scale and evolve
as the organisation grows
CTRM solutions need not be expensive. By adopting Amphora CTRM, your business avoids the issues associated with spreadsheets and is in a better position to manage risks, profits and access to sensitive corporate data. These days, subscription-based pricing that is calculated based on usage means that even the smallest trading firm can afford a professional commercial solution from day 1. Moreover, support and training costs are low as well.
Don’t expose your firm to unmanaged risks using spreadsheets. Start on a Amphora CTRM solution and eliminate those risks and exposures from day 1.
Closing Thought
Spreadsheets have been seen as being fine at the start of trading, but once they become a bottleneck and a significant risk, a lightweight CTRM isn’t a luxury, it’s a growth enabler. These days, auditors, counterparties, regulators and other stakeholders understand the risks a spreadsheet solution pose and this can impact your ability to do business. Meanwhile, Amphora CTRM solutions are available at the right price, with smooth and rapid implementation and quality support.
At Amphora, we offer a niche, flexible, starter package specifically for start-up companies within their first 3 years of trading.
For further information please contact our Director of Sales, david.glasspool@amphora.net
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